Norges Bank Holds Rate at 4.5%, Delays Cuts

Governor Ida Wolden Bache stated that while inflation has slowed to 3 percent (4 percent excluding energy), it remains above target, and rising business costs will likely keep it elevated. The Norwegian economy has cooled, but Norges Bank's Regional Network enterprises expect some activity increase, particularly in the petroleum industry.

Wage growth is high at an expected 5.2 percent this year, contributing to services inflation. The central bank projects the policy rate will remain at 4.5 percent until the end of 2024 before a gradual easing begins, with inflation approaching 2 percent by late 2027.

The krone has strengthened slightly since March, influencing imported goods prices. Norges Bank acknowledges the possibility of a higher interest rate level than seen over the past decade.